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Hospitals are going to get a funding boost thanks to NYS budget: How much will it help?

New York State’s new 2024 budget provides some needed relief to hospitals.

Along with a Medicaid rate increase, the budget includes $1.4 billion for distressed hospitals. But, provisions ensuring hospitals can afford to provide certain levels of care were left out of the budget.

A 2022 report from the Healthcare Association of New York State finds 85% of hospitals reported negative or unsustainable operating margins, a 23% increase from 2019.

Wendy Darwell, president and CEO of the Suburban Hospital Alliance of New York State, said the workforce shortage is driving this financial challenge for hospitals.

“Hospitals are still using out-of-state workers under temporary contracts at extraordinarily high rates,” said Darwell. “So, that’s really, really contributing to their costs right now. But, they also are committed to increasing salaries for their workforce.”

She added that the competitive nature of health care makes this necessary to attract workers, but the current economy makes that a struggle.

However, this follows a national trend. An American Hospital Association report finds hospital’s total contract labor expenses increased 258% in 2022 from 2019.

Outside of the state budget, Darwell noted that there are federal initiatives that could help. She said across the U.S. hospitals are “robbing Peter to pay Paul” to fill labor gaps.

Darwell described what the federal government can do to support a strong national workforce strategy.

“One of the ways the federal government can be of assistance is to free up visa slots to allow qualified foreign trained medical workers to come to the United States,” said Darwell. “There are limitations on those visas, and hospitals are bumping against them right now.”

But, the state of New York is already taking steps beyond the budget process to build the health-care workforce, specifically nurses.

Gov. Kathy Hochul recently signed legislation which permits nursing students to complete at least one third of their clinical training in simulation experiences.